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In the US, exchanges are not-for-profit organizations. They are owned by members, each one with a so-called seat on the trading floor and paying an annual fee for the seat. In actuality only members are allowed to buy and sell securities (stocks). For example, NYSE has 1,366 members. Members are usually subjected to a rigorous test to determine their eligibility and once assigned a seat they usually cannot be unseated unless they decide to sell their seat to another qualified member or they are voted out. As you may imagine seats are very expensive to acquire; their prices could be upwards of $2 million. So how can individuals get access to the trading floor? They don’t — not directly. Their orders are placed with their brokers who may either have a seat on the exchange or may have an agreement with a member company who does the trading on their behalf. There has been talk about some exchanges becoming for-profit. NASDAQ, for example, has gone in that direction, and going further, it is to become a public company selling its own stock to the investors. There has also been some speculation that NASDAQ and NYSE may be looking to combine their operations.

As far as an average investor is concerned it really doesn’t matter what system the stocks are traded under. Regardless of the systems and exchanges, all stock traders directly or indirectly are part of a big auction market known as the stock market.

But what are stocks and why would anyone want to own any?

The Public Company

There are millions of companies in existence around the world. They are engaged in a variety of activities and they come in all sizes. They may manufacture buttons, light bulbs, or tires. Or they may provide services such as advertising, finance, or garbage collection. Their …